Abolition of Universal Banking in Nigeria: A policy Somersault

Jimoh, Abdulrazaq Taiye (2016)

Article

The Central Bank of Nigeria (CBN) aboilished universal banking model in Nigeria in 2010 barely ten years of its adoption. This abolition generated a lot of debates as some economists argued that the gains of past reforms, especially adoption of the banking model, had not been fully realized and therefore tagged its reversal a policy somersault. Therefore, this study assessed empricially the performance of deposit money banks in Nigeria before and after the abolition of universal banking system. Specifically, the study was carried out to examine the profitability and market performance of deposit money banks in Nigeria before and after the abolition of the model. Data were collected from annual reports of the selected banks. The data were analysed using one-way analysis of variance (ANOVA). Results indicate that abolition of universal banking does not have significant effect on ROA, ROE and EPS of deposit money banks in Nigeria. The study concludes that in terms of profitability, reversal of the model might actually be policy somersault. It is however recommended that further studies be conducted on costs of universal banking and how the abolition affects such costs as conflicts of interest and risk exposure. This is because the findings of the study may not generalizable on all areas of universal banking model.

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